Importance of financial literacy in schools
Financial literacy is the ability to understand and effectively applying various financial skills including financial management, budgeting, savings and investing. Financial literacy is essential to understand good short term and long-term habits data leads to a greater financial wellbeing. As an example, sometimes as consumers, we are unaware of the financial consequences of taking on too personal care and having little or no saving at all. In addition, the lack of disposable income also raises the inability to deal with unexpected emergencies that may arrive odd receive proper financial counselling.
In response to this problem, in 2004 The United National Congress declared April 1st as the national financial literacy month on passing resolution 316. Each year, federal and state agencies, credit unions, school and non-profitable organizations, businesses and other institutes observes national financial literacy month to raise awareness about financial literacy education and the consequences that may be associated with lack of understanding about your personal finances.
One of the biggest organizations, Organization for Economic Co-operation and development, establish a network of public experts in 2008, International Network on Financial Education. They have written article on the financial education in schools which tells us about the real problems. In the US, only 27% of the population knows about inflation and can calculate simple interest. In UK, 52% of teenagers are in depth by the time they are 17. The problem is quite clear.
The INFE gives us a very important recommendation. It is crucial that every child is educated financially from as young age as possible when entering our school. So financial education is evidently important.
The importance of financial education
Imagine a world where as a child, we are not only taught the ABCs, multiplication, division but the fundamental principles of money. In schools, they teach us important subjects such as history or geography. But imagine a classroom where alongside maths, we also learn budgeting, investing, financial planning and the actual ways to earn money. At present, our education system neglects the most critical skills in modern world- Financial literacy.
If we look at the bigger picture, we will see that everything we are doing in life is in order to make money whether it is studying, walking or starting a business. Learning the fundamental principles of money from a very young age give the child a much broader perspective about what to do in life, where and how to earn money.
By integrating real world experiences, with financial education, we equip students with tools necessary to not only change their life, but to contribute positively to society, helping the economic growth and prosperity. We all know that the guarantee to success in starting is very hard, as you later get job and earn money. There is nothing wrong with this narrative, but other than earning money, we also need to know how to control this money because in life we have to make informed financial decisions.
For example, in order to buy a house, a person gathers his money but if the money is not enough then he takes loan. Over the period of time, he covers the loan, but sometimes there might be some problems that makes it hard to cover that debt.
That’s the place where financial education comes in head. If we actually know how to budget the money and actually understand the complexities of the slow step we need, then covering the debt will be so much easier. Only if we do not address the gap, we will face the consequences in forms of ruined lives of countless people.
How can financial education be integrated with school curriculum
Financial education is quite important but how can it be integrated with this school system? There are lot of ways to start with.
- First and foremost, financial education can be combined with school curriculum as it can be added to already existing subjects such as maths geography and many more. This can include lessons about budgeting, investing, savings, understanding credits, taxes and basic economic principles.
- Professional development or training of teachers can be provided to enhance understanding of financial concepts so that they can later teach the subjects effectively.
- Financial professionals or experts can be invited to conduct workshops, seminars or interactive sessions about money management, banking, investment and other relevant topics.
- Real life simulations or games can be created which stimulates financial scenarios. This will teach students about budgeting, investing decisions and consequences of their financial choices.
- Specialised courses can be offered which focus solely on the financial literacy. These courses could cover topics such as personal finance, entrepreneurship or financial planning.
How can financial literacy help students?
Financial literacy helps individuals so sufficient so that they can achieve financial stability. By being financial literate, one can be efficient with their finance and hence achieve more goals and maximise the value of their income effectively. This allows individuals to make fewer financial mistakes that could have a negative long-term impact in the future. Throughout the month of April, NYU’s Financial education department along with the student link centre will be providing videos to help you gain your insight on several essential financial topics.
Conclusion:
There are lot of ways to teach financial literacy in schools. But in order to make all these things possible, the students also need to act. Only if all of us realise how important financial education could be, we can change the world completely. But in order to make this possible, it should not only be taught in schools because the information that we have today is beyond unlimited.